China’s Dec new yuan loans seen lower, hit record in 2021

China's Dec new yuan loans seen lower, hit record in 2021
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Chinese 100 yuan banknotes appear on a counting machine as a clerk counts them at a branch of a commercial bank in Beijing, China, March 30, 2016. REUTERS/Kim Kyung-Hoon

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  • New loans were seen in December at 1.25 trillion yuan, compared to 1.27 trillion yuan in November
  • Money supply growth in December saw 8.7% yoy versus 8.5% in November
  • December saw TSF 2.45 trillion yuan, compared to 2.61 trillion yuan in November
  • Money supply data and loans due January 10-15

BEIJING (Reuters) – New bank loans in China likely fell in December, although lending for the whole of 2021 hit a record high as the central bank continued to support its economic policies, a Reuters poll showed.

It was estimated that Chinese banks issued 1.25 trillion yuan ($196.06 billion) in net yuan loans last month, down from 1.27 trillion yuan in November, the median estimate found in a survey of 21 economists.

If the December data, due within the next week, is in line with expectations, the total new lending in 2021 will reach 20.07 trillion yuan, up 2.2% from the previous record of 19.63 trillion yuan in 2020.

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China’s central bank lowered the reserve requirement ratio (RRR) for banks on December 15, the second such step in 2021, as it released 1.2 trillion yuan of long-term liquidity to boost business activity. Read more

The Central Bank also cut interest rates on the approved facility by 25 basis points to support the rural sector and small businesses. Read more

The economy faces multiple challenges as 2022 approaches due to the real estate downturn and severe restrictions related to the emerging Corona virus, which affected consumption and pressured the Central Bank to ease policy.

The Politburo, the country’s top decision-making body, said that China will continue to implement a proactive fiscal policy and prudent monetary policy in 2022. It will keep economic operations within a reasonable range in 2022.

The broad money supply growth in M2 in December saw 8.7% compared to 8.5% in the previous month.

Outstanding yuan loans were expected to grow 11.7% in December from a year earlier, the same growth in November.

Beijing has mostly relied on fiscal stimulus to counteract deflation, cut taxes and issue local government bonds to fund infrastructure projects.

Any acceleration of government bond issuance could boost aggregate social finance (TSF), a broad measure of credit and liquidity.

China issued 1.46 trillion yuan ($229.30 billion) in the 2022 pre-quote of special local government bonds to help stimulate investment and support the economy. Read more

In December, TSF is expected to fall to 2.45 trillion yuan from 2.61 trillion yuan in November.

(dollar = 6.3756 Chinese yuan)

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(Reporting by Judy Hua and Kevin Yao); Editing by Barbara Lewis

Our Standards: Thomson Reuters Trust Principles.


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